NEW DELHI :
At the end of the first day on Monday, Indian Railway Catering and Tourism Corp. Ltd’s (IRCTC) initial public offering (IPO) was subscribed 0.81 times, according to a release by the company.
The issue had received bids for 16.39 million shares at the end of the day, against 20.16 million shares on offer. The IPO, with a price band of ₹315-320 per equity share, will close on 3 October. Retail investors and eligible employees get a discount of ₹10 per share.
Interest from retail investors for the issue was strong, with the IPO getting bids for 15.58 million shares compared to the 7 million shares reserved for them, a subscription ratio of 2.23 times.
For the 160,000 shares reserved for employees, the subscription was 1.15 times with bids for 183,560 shares.
However, interest from non-institutional investors seemed tepid, with bids for 632,960 shares against the 3 million shares reserved for them, a subscription of 21%.
IRCTC is wholly owned by the Centre and comes under administrative control of Indian Railways. It earns a fee on every train ticket it sells online and manages the catering of the food served in trains. It is sells packaged drinking water and earns revenue through travel and tourism business.
With a monopoly on the ticketing in Railways, interest for the IPO is high, with brokerages advising investors to subscribe to the issue.
Besides, starting this weekend, IRCTC, in a first, will function as a private train operator as it prepares to launch two brand new Tejas Express trains, an initiative that will help the state-run company generate additional revenue and plan for more such offerings.
IRCTC reported a net profit of ₹272.6 crore in 2018-19, up from ₹220.6 crore in FY17-18. The company’s revenue grew to ₹1,867 crore in 2018-19 from ₹1,470 crore a year ago.
The proposed IPO is expected to see the government sell stake worth ₹635-645 crore through an offer for sale for 12.5% stake. After offloading up to 20 million shares in IRCTC via the IPO, the government’s stake will come down to 87.5%. The company will not raise any fresh funds from the issue.
The book running lead managers to the offer are YES Securities (India), SBI Capital Markets and IDBI Capital Markets & Securities.